Rosen v. Gemini Title & Escrow, LLC et al

Filing 17

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 3/10/14. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: MINH VU HOANG AND
THANH HOANG
______________________________
GARY A. ROSEN, Trustee
Appellant

:
:
:

v.

:

GEMINI TITLE & ESCROW, LLC,
et al.
Appellees

Civil Action No. DKC 12-0593

:
:

MEMORANDUM OPINION
Presently pending and ready for resolution is a motion for
rehearing

filed

(“Gemini”),

by

the

Law

Appellees
Offices

Gemini

of

Title

Craig

A.

Offices”), and Craig A. Parker (“Parker”).
relevant

issues

necessary.

have

been

briefed

and

&

Escrow,

Parker,

LLC

(“Law

(ECF No. 12).

no

hearing

is

See Fed.R.Bankr.P. 8012; Local Rule 105.6.

LLC

The

deemed
For the

reasons that follow, the motion will be denied.
I.

Background
Appellant Gary A. Rosen, the chapter 7 trustee for the

bankruptcy estate of Minh Vu Hoang (“Debtor”), commenced the
adversary proceeding from which this appeal arises on December
18, 2009, related to Appellees’ role in ten post-petition real
estate

transactions

possession.

The

while
trustee

Debtor
alleged

was

serving

that

Gemini

as

debtor-in-

“handled

the

closings” in these transactions and “received the proceeds of

[the]

sales,

estate.”

which

(ECF

No.

constituted
1-24

¶

property

4).

of

Rather

than

the

bankruptcy

“turning

[the

proceeds] over to the estate, Parker (and his LLC) [as agents
for

Gemini]

distributed

them

[Debtor’s] instructions.”

to

(Id.).

various

third

parties

on

According to the trustee,

those funds were thereby “lost to the estate” (id.), and he
filed suit to recover them.
The adversary complaint alleged twelve counts, including,
as

relevant

here,

two

claims

seeking

turnover

of

estate

property, pursuant to 11 U.S.C. § 542(a),1 and two claims for
conversion

related

to

the

same

property.

Although

the

transactions at issue occurred over four years prior to the time
the complaint was filed, the trustee asserted that he “exercised
due diligence” in bringing them, adding that,
due to the complicated and tangled nature of
[Debtor’s] assets and financial affairs, and
[Debtor’s] efforts (aided and abetted by
[Appellees]) to conceal her assets and
hinder creditors, [he] did not discover the
facts giving rise to the claims being
asserted here until less than three years
before the commencement of this adversary
proceeding.
(Id. at ¶¶ 158-59).

Thus, the trustee invoked the so-called

“discovery rule,” by which a cause of action is not deemed to
have accrued until the plaintiff has, or reasonably should have
1

All further reference to bankruptcy provisions will be to
section number only; these sections are all found in Title 11 of
the United States Code.
2

had, “possession of the critical facts that he has been hurt and
who has inflicted the injury.”

United States v. Kubrick, 444

U.S. 111, 122 (1979); see also Poffenberger v. Risser, 290 Md.
631, 636 (1981).
Appellees

moved

to

dismiss,

arguing,

in

part,

that

the

trustee’s claims were time-barred by the two-year statute of
limitations applying to avoidance actions under § 549(d).
No.

1-26,

at

11-12).

In

opposing

that

motion,

the

(ECF

trustee

maintained that, because turnover is an equitable remedy, the
timeliness
laches.

of

such

a

claim

is

governed

by

the

doctrine

of

In establishing a laches defense, he argued, Appellees

had the burden of showing both inexcusable delay and resulting
prejudice and “[n]either of those elements exists here.”
No. 1-34, at 36).

(ECF

As to the issue of inexcusable delay, the

trustee asserted:
In deciding whether a plaintiff delayed
unreasonably or inexcusably, there is a
presumption against a finding of such delay
if the complaint was filed within the
limitations period applicable to the most
closely analogous action at law.
In this
case, the most closely analogous cause[] of
action is conversion, which is subject to
Maryland’s three-year general statute of
limitations.
(Id.

at

36-37

(internal

footnotes

omitted)).

In

reply,

Appellees argued that the trustee’s laches analysis was “wrong,”
but, “[e]ven assuming that [he was] correct, all of his claims

3

[were] time barred” because the alleged conduct occurred more
than three years prior to the time the adversary complaint was
filed and, under Maryland law, “prejudice to defendant need not
be shown [to establish laches] if an analogous action at law
would be barred by the applicable statute of limitations[.]”
(ECF No. 1-40, at 6-7 (quoting Finch v. Hughes Aircraft Co., 57
Md.App. 190, 243 (1984)).
A hearing on Appellees’ motion to dismiss was held before
United States Bankruptcy Judge Thomas J. Catliota on June 9,
2010.

In addressing Appellees’ argument as to the timeliness of

the turnover claims, the court ruled:
I am going to grant the motion to dismiss on
statute of limitations without prejudice to
the
[trustee’s]
right
to
amend
[the]
complaint, to assert further facts upon
which a determination could be made that the
discovery rule applies here to allow the
complaint to survive.
In particular, factors along the lines
of the reason for the invocation of the
discovery rule, the cause of the aggrieved
parties obtaining knowledge of the wrong at
a time later than its initial perpetration.
Those factors [were] given in the, for
example, Shah v. Health Plus, 696 A.2d 473,
Md. App. 1997[,] and the other cases cited
by the [Appellees].[2]

2

In Shah v. HealthPlus, Inc., 116 Md.App. 327, 338 (1997),
the Court of Special Appeals of Maryland held, in relevant part,
that “the bill of complaint must [] state with specificity . . .
the reasons for invocation of the discovery rule, i.e., the
cause of the aggrieved party’s obtaining knowledge of the wrong
4

So,
[the
dismissal]
is
without
prejudice to the [trustee’s] right to amend
the complaint and come forward with factors
and allegations for which the discovery rule
would apply.
(ECF No. 1-41, at 7-8).

Counsel for the trustee advised that,

in an amended complaint, he “would like to also add alleged
facts that would go to the issue of [the Appellees] not being
prejudiced with regard to [a] laches defense,” to which Judge
Catliota responded, “You can amend as you feel appropriate.”
(Id. at 8).

Counsel further inquired as to whether the court’s

“ruling on the statute of limitations also covers laches[.]”
(Id. at 9).

The court answered, “It is basically saying that at

this point the complaint needs to be bolstered, [and the ruling
is] without prejudice to whatever arguments the parties want to
make on [the] statute of limitations, either way.”

(Id.).

The trustee filed his first amended complaint on May 2,
2011, asserting three counts, including two claims for turnover.
Despite

the

court’s

instructions

at

the

prior

hearing,

the

amended complaint contained no facts related to when the trustee
discovered the basis of his turnover claims.
numerous

allegations,

based

“[u]pon

Instead, it added

information

and

belief,”

that no prejudice inured to Appellees as a result of a delay in
filing.

(ECF No. 1-2 ¶¶ 166-68).

at the time later than its initial perpetration.”
citations omitted).
5

(Internal

Appellees
trustee

moved

“ignored

had

again

the

to

dismiss,

Court’s

observing

explicit

that

the

instructions

to

include specific factual allegations showing why the discovery
rule should apply.”

(ECF No. 1-4, at 2).

that

of

the

intended
degree

addition
to

of

Trustee

counter

a

laches

prejudice

.

.

ha[d]

three-year

allegations

already

statute

.

regarding

defense,

[was]

but

limitations

that
would

prejudice

argued

irrelevant”

acknowledged

of

Appellees recognized

that

because

“the

“[t]he

Maryland’s
govern”

was

general

and,

under

Maryland law, where “the delay extends beyond the applicable or
analogous
required.”

period

of

limitation,

no

showing

of

prejudice

is

(Id. at 13 (internal emphasis omitted)).

In opposing the motion, the trustee conceded that “there
was at least inquiry notice of the relevant facts more than
three years before this suit was filed”; thus, he decided “to
drop the claim that the complaint was filed within the statute
of limitations and (with one exception) to limit the amended
complaint to equitable claims, as to which the expiration of the
limitations period would not be decisive.”

(ECF No. 1-8, at 3).

The trustee again asserted that the timeliness of a claim for
turnover under § 542(a) is subject to the doctrine of laches,
adding that “[t]he laches issue is governed by federal law,”
pursuant
essential

to

which

element

“the
.

.

prejudice
.

even
6

to

though

the

defendant

this

is

proceeding

an
was

commenced after the most closely analogous limitations period
had expired.”
complaint
claims
trustee

(Id. at 5).

“adequately

here

w[ould]

argued

that

Further asserting that the amended

alleged
not

that

unfairly

any

“attempt

any

delay

prejudice
to

filing

the

[Appellees],”

the

litigate

in

the

issue

of

prejudice on the facts in a motion to dismiss is inappropriate.”
(Id. at 12).
Shortly before a scheduled hearing on Appellees’ motion to
dismiss the amended complaint, the bankruptcy court rendered a
decision in another adversary proceeding stemming from Debtor’s
main bankruptcy case, In re Minh Vu Hoang, 452 B.R. 902, 906
(Bankr.D.Md. 2011) (“Dahan I”), in which it held that “§ 542
provides for the turnover of pre-petition transfers, while § 549
is

the

appropriate

means

to

attack

post-petition

transfers.”

During the opening argument of counsel for Appellees at the
motions hearing in the instant case, the court advised counsel
of its decision in Dahan I:
I take it you are not familiar with the
memorandum
I
issued
in
an
adversary
proceeding before me brought by this same
Plaintiff, the Chapter 7 Trustee for Minh Vu
Hoang and Thanh Hoang, in adversary 11-87
about 10 days ago?
I adopted the rule that –- I adopted
the position [of Deckelbaum v. Cooter,
Mangold, Tompert & Chapman, P.L.L.C., 275
B.R. 737 (D.Md. 2001), that] Section 542
cannot be used by the Trustee to recover

7

post-petition
transfers.
That
exclusive province of Section 549.

is

the

. . . .
I guess I could probably cut this up
and tell you that I am going to adopt that
position.
. . . .
I think –- I have the sense, from a
status conference, that the [trustee] in the
Dahan case that I mentioned is going to
appeal that.
So, maybe we will get an
ultimate resolution but I am going to adopt
that here.
So, I will be dismissing the
[two §] 542 counts.
(ECF No. 1-44, at 6-7).

Counsel for the trustee conceded that

“the facts here are within the scope of [the Dahan I] ruling”
and asserted that he was “not going to try to distinguish the
facts.”

(Id. at 7).

He asked the court to rule on “the issues

that have been raised relating to [laches] and the statute of
limitations . . . [to] tee those issues for the appeal also”
(id. at 12), but the court declined, reasoning, “I do not see
how I could say that [the trustee] failed to state a claim under
the law but if [he] did, here is what I would rule on the
statute of limitations or [laches]” (id. at 13).
Appellant noted the instant appeal on February 2, 2012.
the

same

date

that

his

opening

brief

was

due,

this

rendered its decision in the appeal from Dahan I.
Minh Vu Hoang, 469 B.R. 606 (D.Md. 2012) (“Dahan II”).

8

On

court

See In re
In Dahan

II, 469 B.R. at 615, the court found that the property at issue
in that case could not be recovered pursuant to the turnover
provision

based

on

three

underlying

premises:

“(1)

§

542(a)

entitles the trustee to possession of property of the estate;
(2) property that is transferred is not property of the estate;
and (3) the property at issue in this case was transferred.”

It

stopped short of endorsing the broad concept embraced by some
courts that an action for turnover under § 542(a) is confined to
property of the estate in possession of the defendant at the
time

the

bankruptcy

petition

is

filed.

Rather,

the

court

opined, “property of the estate may be received by a defendant
(most

often

the

debtor),

post-petition,

without

a

transfer

having occurred,” in which case “the property, or its value, is
subject to a turnover order to the extent that the debtor had an
interest at the time the bankruptcy case commenced.”

Dahan II,

469 B.R. at 620 (citing In re Shearin, 224 F.3d 353, 356-57 (4th
Cir. 2000)).
In

the

instant

case,

the

trustee

requested,

and

was

granted, additional time to consider the implications of Dahan
II prior to filing his opening brief.

On April 9, 2012, he

filed a brief, presenting the following question:
This Court held in [Dahan II] that §
542(a) applies in cases where the defendant
received
property
of
the
estate
postpetition, but only if he received it
other than by means of a “transfer” as
9

defined in the Bankruptcy Code.
The
complaint here alleges that the defendants
received property of Minh Vu Hoang’s estate
postpetition, and the Chapter 7 trustee in
her bankruptcy has sued the defendants under
§ 542(a) to recover the value of the
property they received.
The question therefore presented under
Dahan
[II]
is
whether
the
defendants
received the property at issues as the
result of a transfer.
(ECF No. 5, at 7).
addressed

to

that

essence,

that

The entirety of the opening brief was
question,

because

the

with

the

property

at

trustee
issue

arguing,

never

left

in
the

estate prior to the time Appellees possessed it, a turnover
claim under § 542(a) was viable.
Appellees’ brief in opposition was not so limited.
than

responding

to

the

question

presented

by

the

Rather
trustee,

Appellees presented their own question: “Whether the Bankruptcy
Court properly dismissed Trustee’s § 542 claims where the claims
were

based

on

post-petition

transfers,

made

prior

to

the

appointment of the Trustee, and were filed after the expiration
of the applicable statute of limitations.”

(ECF No. 6, at 2).

After briefly addressing the trustee’s argument under Dahan II,
Appellees

argued

at

considerable

turnover claims were time-barred.
(1)

that

the

turnover

claims

length

that

the

trustee’s

Specifically, they contended

were

governed

by

the

two-year

statute of limitations contained in § 549(d); (2) that, if the

10

doctrine of laches was applicable, the claims were still barred
by Maryland’s three-year general statute of limitations without
a showing of prejudice; and (3) that, even if a showing of both
inexcusable delay and prejudice were required, the allegations
contained in the amended complaint were insufficient to survive
a motion to dismiss.
By a memorandum opinion and order issued March 15, 2013,
the court reversed the ruling of the bankruptcy court, finding
that

because

property

of

the
the

funds

sought

bankruptcy

by

estate,

the

trustee

“the

sufficiently state[d] a claim for turnover.”

constituted

amended

complaint

See In re Minh Vu

Hoang, Civ. No. DKC 12-0593, 2013 WL 1105021, at *9 (D.Md. Mar.
15, 2013).

The court also addressed Appellees’ argument that

the turnover claims were time-barred:
While the limitations period in [§ 549(d)]
effectively bars a turnover claim where a
post-petition transfer has occurred – i.e.,
because the transfer cannot be avoided, thus
the property cannot be drawn back into the
estate such that the trustee would have a
right of possession – the property at issue
here, as noted, was property of the estate.
It is likely true that turnover claims,
which are equitable in nature, are subject
to the doctrine of laches.
See In re
Mushroom Transp. Co., 382 F.3d 325, 336-37
(3rd Cir. 2004) (finding turnover claim
subject to laches, requiring a showing of
inexcusable delay in bringing the action and
prejudice resulting therefrom).
To the
extent that Appellees have raised such a
defense, its merit does not appear on the
face of the complaint. As the United States
11

District Court for the Middle District of
North Carolina observed in Fulmore v. City
of
Greensboro,
834
F.Supp.2d
396,
421
(M.D.N.C. 2011):
Laches is an affirmative defense . .
. and “a motion to dismiss filed
under [Rule 12(b)(6)], which tests
the sufficiency of the complaint,
generally cannot reach the merits of
an affirmative defense.” Goodman v.
Praxair, Inc., 494 F.3d 458, 464 (4th
Cir. 2007) (en banc);
cf. Fed.
Express Corp. v. U.S. Postal Serv.,
75 F.Supp.2d 807, 814 (W.D.Tenn.
1999) (“As evaluation of a claim of
laches
is
dependent
upon
the
submission of evidence, [Rule 12(b)
(6)] is not the proper vehicle for
bringing
such
a
request.”).
An
affirmative
defense
may
only
be
reached at the Rule 12(b)(6) stage
“if all facts necessary to the
affirmative defense ‘clearly appear[]
on the face of the complaint.’”
Goodman, 494 F.3d at 464 (alteration
in
original)
(emphasis
omitted)
(quoting Richmond, Fredericksburg &
Potomac R.R. Co. v. Forst, 4 F.3d
244, 250 (4th Cir. 1993)).
While expiration of the § 549(d) limitations
period may prove to be relevant to a laches
analysis, it is not dispositive.
See In re
Mushroom Transp. Co., 382 F.3d at 336-37.
Rather, it merely creates a presumption of
inexcusable
delay
that
Appellant
must
eventually rebut, but the defense “is not
ordinarily considered on a motion to dismiss
because the plaintiff is not required to
negate it in its complaint.”
Bethesda
Softworks, LLC v. Interplay Entertainment
Corp., Civ. No. DKC 09-2357, 2010 WL
3781660, at *9 (D.Md. Sept. 23, 2010).
Thus,
while
the
turnover
claims
may
eventually be found to be time-barred, that

12

determination cannot be made in the context
of a motion to dismiss.
Id. at *10.
Two weeks later, Appellees filed the pending motion for
rehearing.

(ECF No. 12).

Appellant has opposed that motion

(ECF No. 15) and Appellees have filed a reply (ECF No. 16).
II.

Standard of Review
The United States District Court for the District of South

Carolina identified the appropriate standard in considering a
motion for rehearing in Baumhaft v. McGuffin, C/A No. 4:06–CV–
3617–RBH, 2007 WL 3119611, at *1 (D.S.C. Oct. 22, 2007):
Fed. R. Bankr.P. 8015 provides that “a
motion for rehearing may be filed within
1[4] days after entry of the judgment of the
district court . . .” “The purpose of Rule
8015 is to provide recourse to a party . . .
after a district court . . . has overlooked
or misapprehended some point of law or
fact.” 10 Collier on Bankr.P. 8015.01 (15th
ed. rev. 2004). Although Rule 8015 does not
specify the standard for ruling on a
petition for rehearing, it appears that most
courts have looked by analogy to Fed. R.
App. P. 40. See 9 Collier on Bankr.P.
8015.04
at
8015–4
(collecting
cases).
Appellate Rule 40 provides that petitions
for rehearing must include points which the
court
allegedly
overlooked
or
misapprehended.
Petitions
for
rehearing
should not simply reargue the plaintiff’s
case or assert new grounds. See Sierra Club
v. Hodel, 848 F.2d 1068, 1100–01 (10th Cir.
1988).
At base, motions for rehearing are “designed to ensure that the
appellate court properly considered all relevant information in
13

rendering its decision.”

In re Zegeye, Civ. No. DKC 04-1387,

2005 WL 544763, at *1 (D.Md. Mar. 4, 2005) (citing In re Hessco
Industries, Inc., 295 B.R. 372, 375 (9th Cir. BAP 2003)).
III. Analysis
In their motion for rehearing, Appellees argue that the
court overlooked the “unique circumstances present in the case
at bar which enabled the Bankruptcy Court to properly grant
Defendants’ Motion to Dismiss Trustee’s turnover counts.”
No. 12-1, at 3).3

(ECF

While they acknowledge that it is generally

true that a laches defense cannot be adjudicated on a motion to
dismiss

because

affirmative

the

defenses

plaintiff
in

the

cannot

complaint,

be

expected

they

assert

to

rebut

that

an

exception applies “in the unusual case where a claim is filed
clearly

beyond

the

applicable

limitations

period

and

the

plaintiff seeks to forestall its dismissal by alleging the facts
of discovery.”

(Id. at 3 (quoting Goodman, 494 F.3d at 466

(emphasis in original))).
3

The trustee argues that Appellees’ motion “does not
satisfy the standards for rehearing,” insofar as it “merely
repeats – in many places verbatim – the arguments in the
[Appellees’] brief.” (ECF No. 15, at 2). As noted, however, a
motion for rehearing provides recourse to a party where the
court has overlooked some aspect of the argument presented in
the appellate briefs.
Thus, the relevant question is not
whether the moving party raised the same argument on appeal, but
whether the motion relates to “points which the court allegedly
overlooked or misapprehended.”
Baumhaft, 2007 WL 3119611, at
*1.
Because Appellees’ motion does relate to points the court
allegedly overlooked, the trustee’s argument that it is
procedurally improper is unpersuasive.
14

According to Appellees, that is “precisely the situation
here”

(id.)

complaint,
trustee’s

because

on

Judge

limitations

right

to

file

Catliota
grounds,

an

dismissed

without

amended

the

original

prejudice

complaint

to

the

bolstering

his

allegations regarding application of the discovery rule.

Thus,

the trustee was well aware that he was required to rebut a
limitations or laches defense in his amended complaint.
than

doing

so,

however,

he

essentially

conceded

Rather

that

the

turnover claims were untimely under the most closely analogous
statute of limitation, Maryland’s general three-year statute of
limitations

applying

to

the

tort

of

conversion.

Appellees

observe that, under Maryland law, “where suit is filed outside
the analogous limitations period, laches bars the suit without
any

showing

of

prejudice.”

(Id.

at

8).

Because

it

is

undisputed that the basis of the turnover claim was not filed
within three years after discovery, they contend that dismissal
was warranted.
Appellees further assert that “federal law is in accord
with

Maryland

law

on

this

issue.”

(Id.).

They

cite

the

decision of the Supreme Court of the United States in Cope v.
Anderson, 331 U.S. 461, 464 (1947), for the proposition that
“equitable
limitations,
limitations

claims

are

without
period

for

subject

any

showing

concurrent
15

to
of
legal

state

statute[s]

prejudice,
claims

has

where

of
the

expired.”

(ECF No. 12-1, at 8).

According to Appellees, the concurrent

legal claim here was actually pleaded by the trustee in the
original complaint and sought to recover the same funds as the
turnover count currently at issue.

Thus, in Appellees’ view,

the trustee’s concession that the limitations period applying to
the conversion count had expired essentially doomed the turnover
counts

as

[Appellees]

were

prejudiced by the [the trustee’s] delay in filing suit[.]”

(Id.

at 10).

well,

“regardless

of

whether

Moreover, even if the court were to find that both

factors in the traditional laches analysis – inexcusable delay
and

prejudice

trustee’s

–

must

“failure

to

be

proven,

rebut

the

Appellees

contend

presumption

of

that

the

inexcusable

delay, by itself requires affirmance of the dismissal of [his]
turnover claims.”

(Id. at 11).

Finally, they argue that the

allegations in the complaint as to prejudice, made upon the
trustee’s “information and belief,” are insufficient to rebut
the presumption of prejudice.4
In opposing Appellees’ motion, the trustee maintains that,
under the doctrine of laches, “the expiration of the [analogous]
limitations period does not operate as a rigid bar, but merely

4

Appellees also contend that the trustee’s allegations as
to prejudice are incorrect – i.e., that they have been
prejudiced by the delay in filing. As the trustee points out in
his opposition papers, however, this argument necessarily
relates to issues outside the four corners of the amended
complaint; thus, it could not be decided on a motion to dismiss.
16

raises a presumption of laches, which may be rebutted.”
2).

(Id. at

He further argues that “the laches defense here is governed

by federal law” and that the concurrent legal remedy doctrine
cited by Appellees “applies only where the legal remedy arises
under

federal

law.”

(Id.

at

4-5).

Thus,

“[a]

claim

for

conversion under state law does not qualify” (id. at 5), and the
traditional two-pronged laches analysis applies.

According to

the trustee, because Appelles must establish both prongs, only
one need be rebutted in order for the defense to fail and the
allegations in the amended complaint that no prejudice inured to
Appellees were sufficient to survive a motion to dismiss.
Resolution of the instant motion turns on whether a laches
defense can be determined on the basis of inexcusable delay
alone.

If so, Appellees’ argument has merit because the trustee

has conceded that the adversary proceeding was commenced over
three years after discovery of the facts supporting the turnover
claims.

If not – i.e., if prejudice to Appellees must also be

considered – then the issue cannot be decided in the context of
a

motion

to

dismiss

because

an

expanded

necessary, which was the ruling on appeal.
will

be

confined

to

Appellees’

arguments

record

would

be

Thus, the analysis
that,

under

the

circumstances of this case, no prejudice need be shown.
The trustee seeks turnover pursuant to § 542(a), a federal
statute that does not contain a statute of limitations.
17

The

accrual of a cause of action based on a federal statute, “even
one that borrows a state statute of limitations, is a question
of federal law.”

East West, LLC v. Rahman, 896 F.Supp.2d 488,

504 (E.D.Va. 2012) (citing Synergistic Int’l, L.L.C. v. Korman,
Civ. No. 2:05cv49, 2007 WL 517677, at *9 (E.D.Va. 2007)).
“Because turnover claims are equitable in nature, they are
subject to laches.”

In re Mushroom Transp. Co., Inc., 382 F.3d

325, 337 (3d Cir. 2004) (internal citations omitted); see also
Walker

v.

Weese,

286

B.R.

294,

299

(D.Md.

2002).

“Laches

imposes on the defendant the ultimate burden of proving ‘(1)
lack

of

diligence

asserted,
defense.’”

and

by

(2)

the

party

prejudice

against
to

the

whom
party

the

defense

asserting

is
the

White v. Daniel, 909 F.2d 99, 102 (4th Cir. 1990)

(quoting Costello v. United States, 365 U.S. 265, 282 (1961)).
A defendant demonstrates lack of diligence “either by proof that
the action was not commenced within the period provided by the
applicable

statute

of

limitations

indicating a lack of diligence.”

or

by

facts

otherwise

White, 909 F.2d at 102.

The

prejudice element may be shown by proof of “a disadvantage on
the part of the defendant in asserting or establishing a claimed
right or some other harm caused by detrimental reliance on the
plaintiff’s conduct.”

Id.

Where, as here, unreasonable delay

is established, there is a strong presumption of laches.

See

PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111, 121 (4th
18

Cir. 2011).

Nevertheless, “the defendant is ultimately required

to prove prejudice (given the defendant’s burden to plead and
prove laches under Fed.R.Civ.P. 8(c)) and may either rest on the
inference alone or introduce additional evidence.”

White, 909

F.2d at 102.
The

concurrent

remedy

doctrine

invoked

by

Appellees

has

apparently never been addressed by the Fourth Circuit or any
district court therein.
courts,

is

that

“where

The basic principle, as stated by other
legal

and

equitable

claims

coexist,

equitable remedies will be withheld if an applicable statute of
limitations bars the concurrent legal remedy.”

Gilbert v. City

of Cambridge, 932 F.2d 51, 57 (1st Cir. 1991)); see also United
Transp. Union v. Florida East Coast Ry. Co., 586 F.2d 520, 524
(5th Cir. 1978) (“This Court is of the opinion that both legal
and equitable relief is sought and that, therefore, the statute
of limitations bars both.”).

Remedies are concurrent when “an

action at law or equity could be brought on the same facts.”
National

Parks

and

Conservation

Ass’n

v.

Tennessee

Valley

Authority, 502 F.3d 1316, 1327 (11th Cir. 2007) (quoting United
States v. Telluride Co., 146 F.3d 1241, 1248 n. 12 (10th Cir.
1998)).
Here, it appears that a claim for conversion could not even
be viable, insofar as the res at issue is money.

See John B.

Parsons Home, LLC v. John B. Parsons Foundation, --- Md.App. --19

, ----, 2014 WL 852062, at *9 (2014) (“The general rule is that
monies are intangible and, therefore, not subject to a claim for
conversion.”); see also Allied Inv. Corp. v. Jasen, 354 Md. 547,
560

(1999)

(finding

no

concurrent

remedies

where

“the

well-

pleaded facts of petitioners’ complaint could not state a claim
for conversion in any event.”).

In any event, the elements of

conversion and turnover are distinct – i.e., conversion consists
of “a physical act combined with a certain state of mind,” John
B. Parsons Home, 2014 WL 852062, at * 9, while turnover requires
only

possession

–

thus,

they

could

not

be

concurrent

legal

remedies.
Appellees’ alternative argument that “an equitable claim
must be dismissed unless both presumptions [i.e., inexcusable
delay

and

prejudice]

are

rebutted”

(ECF

No.

12-1,

at

11

(internal emphasis removed)), relies solely on the decision of
the United States Court of Appeals for the Third Circuit in
Satana Products, Inc. v. Bobrick Washroom Equipment, Inc., 401
F.3d 123, 139-40 (3d Cir. 2005).

In that case, the court found

that, once it was established that the applicable statute of
limitations had expired, it was incumbent upon the plaintiff to
prove

that

“its

delay

was

prejudice [the defendant].”

excusable

and

that

it

did

not

Id. at 139 (emphasis in original).

Tellingly, Santana was decided in district court in the context
of

a

summary

judgment

motion,
20

not

a

motion

to

dismiss.

Moreover, the rule set forth in that case does not appear to
have been adopted by the Fourth Circuit, which continues to
place the burden on the defendant “to plead and prove laches
under Fed.R.Civ.P. 8(c)[.]”
In

sum,

the

White, 909 F.2d at 102.

traditional

two-pronged

laches

analysis

is

applicable, as the court determined in the decision on appeal.
Because the merit of the laches defense cannot be conclusively
determined based on the face of the amended complaint, the issue
cannot be decided on a motion to dismiss.
III. Conclusion
For the foregoing reasons, Appellees’ motion for rehearing
will be denied.

A separate order will follow.

________/s/_________________
DEBORAH K. CHASANOW
United States District Judge

21